Forecasts suggest that oil and gas decommissioning work valued at somewhere between £15 billion and £16 billion will be performed in the UK alone over the next decade. Globally, the figure is expected to be several times higher.
With OGUK’s Decommissioning Insight 2019 report predicting that as many as 62 fields would host decommissioning activity in 2020, the sector anticipated this would be a year of growth in the UKCS, but the reality has been very different.
Our own market assessment at Aquaterra Energy suggests around 70% of planned decommissioning work has been deferred (in part or entirely) and 10% cancelled; leaving only 20% to go ahead. The Covid-19 pandemic and the low oil price are, of course, the twin reasons behind this slump; the former poses very significant challenges to project execution, while the latter obviously changes the economic landscape against which operators make strategic decisions.
Decommissioning oil and gas assets – a strategic approach
Over the last few months, we have seen a real uptick in requests for tenders, a sure sign the market is starting to move again.
As decommissioning oil and gas assets moves back up the agenda, operator’s mindsets are shifting. In the past, operators have often partnered with specialists in specific areas, such as well re-entry and surface riser systems, but now they’re looking for integrated work packages as an efficient and effective way to deliver a project’s objectives.